New laws to crack down on ambulance chasers and bogus whiplash claims that drive up cost of car insurance

'Ambulance-chasing' lawyers and bogus whiplash claims could be stamped out under new measures planned by the Government to reduce insurance fraud.

Courts will be given new powers to throw out compensation actions where claimants have been dishonest, while lawyers will be banned from offering accident victims incentives like money or iPads to encourage them to make a claim.

The reforms by the Ministry of Justice are designed to reduce car insurance premiums for honest customers by reducing the amount insurers have to pay out and tackling the rise in compensation culture.

Dishonest: The number of bogus insurance claims hit 59,000 in 2013.

The number of dishonest insurance claims in 2013 topped 59,000, a rise of 34 per cent on the year before, and cost insurers £811million, according to the Association of British Insurers.

In spite of this, the average car insurance premium fell by more than £100.

But Paul Evans, chief executive of AXA UK, said: 'Motor premiums are still far higher than they need to be, driven by a high number of exaggerated or fraudulent claims, many of which are for whiplash.

'There is no doubt that people have been encouraged and motivated to do this by claims management companies.

'Consumers need to understand that under these new proposals from the Government, anyone found to be dishonest when making a claim will run the risk of having their entire case thrown out of court and losing every penny of potential compensation, even if part of the claim is legitimate.'

The Government's measures will tackle bogus motor claims and also others such as "trips and slips" at work and in public places, the MoJ said.

Powers enabling courts to refuse dishonest compensation claims will stop people from exploiting the system by grossly exaggerating their injuries.

Improved medical assessments will also help reduce questionable whiplash claims, with assessments carried out be independent professionals setting fixed fees.

New rules will also stop claims being settled without confirmation of a claimant's injuries.

In the first three months of this year, the MOJ's claims management regulator issued 126 warnings as well as cancelling two licences for claims management firms found to be misleading people over the phone and via text messages in a bid to win new businesses.

The MoJ welcomed assurances from the insurance industry that savings through the new regulations would be passed on to customers.

Otto Thoresen, director general of the ABI, said: 'These changes are a very positive development for the vast majority of honest insurance customers who end up paying for the fraud of the minority.

'We applaud the decision to ban the distasteful advertising which offers cash or other inducements for personal injury claims. This only serves to reinforce to unscrupulous claimants that there is a compensation culture to exploit.'

Justice Secretary Chris Grayling added: 'We are making sure we do our bit to help drivers with the cost of running a car, and putting money back in their pockets.

'Insurance premiums have fallen by record amounts over the past year as we have turned the tide on the compensation culture but there is more to do. We are continuing to go after the fraudsters who force up costs for honest drivers.'"